High Court 

Holfeld Plastics Limited v ISAP OMV Group SPA

1995/4135 P 

19 March 1999 

 
GEOGHEGAN J: 

This is a motion on notice brought pursuant to Order 12, Rule 26, of the Rules of the Superior Courts seeking a dismissal or striking out of these proceedings on the grounds that by virtue of Article 17 of the Brussels Convention, 1968 which is incorporated into Irish law, the Court has no jurisdiction to hear and determine the case. 

The action itself is brought by an Irish company against an Italian company arising out of the supply by the Defendant to the Plaintiff of an allegedly defective extrusion line in breach of contract. It would seem that the contract was partly in writing and partly oral but for the purposes of determining this application I do not have to decide at what point in time there was a final contract between the parties for reasons which I will explain. I have come to the conclusion on the basis of documentation which incontrovertibly passed between the parties and at least form part of the final contract, there was an exclusive jurisdiction agreement that in the event of dispute the parties had to accept as the competent Court of law the Courts in the place where the vendor has its head office. That place is Verona in Italy. 

Paragraph 6 of the principal Affidavit sworn on behalf of the Defendant by Nicholas Turner states the following:- 

"The contract provides at Clause 17 as follows:- 

'COMPETENT COURTS OF LAW 

In the event of dispute, the parties shall accept as the competent Court of law, the Courts in the place where the Vendor has his head office.' 

The Vendor (the Defendant in these proceedings) has its head office in Verona, Italy and accordingly I say that it is the Courts of Italy which should have jurisdiction in relation to the Plaintiffs claim herein. 

I am bound to say that the Deponent is being disingenuous in swearing a paragraph in that form. If that was an accurate description of the contractual position there would be no problem at all and this dispute would never have reached the Courts. The reality is that the contract is not comprised in one single document with a particular jurisdiction clause. The contract consists of a number of documents and probably orally agreed terms in addition. In fairness to Mr Turner he does explain the position more accurately later on in the Affidavit. He says that on 18 November, 1992 the Defendant's agent for the UK and Ireland, Engelmann & Buckham Machinery Limited, sent the Plaintiff at its request a quotation on the Defendant's behalf for the provision of an extrusion line. A meeting was held in Italy on 13 and 14 January, 1993 between representatives of both companies at which commercial and technical details of the quotation were discussed. Following on that meeting a revised quotation was sent to the Plaintiff on 15 January, 1993. On 19 January, 1993 the Plaintiff faxed to the Defendant's agent an order for the extrusion line "as per your quotation of 15.01.93 and detailed below". The Defendant's agent then sent the Plaintiff a confirmation of order on 17 February, 1993. By mistake that confirmation of order is dated 17 February, 1992 but it would have been at all times perfectly obvious that it was intended to be 17 February, 1993. Both of the quotations, that is to say the quotation of 18 November, 1992 and the quotation of 15 January, 1993 and indeed the order confirmation sent on 17 February, 1993 following the Plaintiffs order, included the following clause:- 

"CONDITIONS OF CONTRACT 

This order is subject to our principals OMV Contract of Sale, a copy of which is enclosed herewith and which will form an integral part of every contract arising therefrom." 

The copy was in fact enclosed and Clause 17 of it provided as follows:- 

"COMPETENT COURTS OF LAW 

In the event of dispute, the parties shall accept as the competent Court of law, the Courts in the place where the Vendor has his head office." 

The argument between the Plaintiff and the Defendant is quite simple. The Defendant says that any orders made by the Plaintiff clearly incorporated the terms and conditions of the Defendant and in particular the Defendant relies on the words "as per your quotation of 15.01.93 and detail below" in the faxed order from the Plaintiff of 19 January, 1993. The Defendant says that that reference can only mean a reference to the quotation with all documentation expressly annexed to it and therefore all the terms and conditions that went with the quotation. The Plaintiff on the other hand argues that at that stage the terms and conditions which contain the jurisdiction clause had remained unread and that in referring to the quotation of 15 January, 1993 they were referring only to technical and price details and were not intending to incorporate the terms and conditions. If it was simply a matter of interpreting the contract in accordance with Irish law, I would have no hesitation in holding in favour of the Defendant. These were two commercial companies dealing at arms length and a company such as the Plaintiff should expect supplier companies such as the Defendant to annex to all its sales its own terms and conditions. Both quotations made it expressly clear that those conditions were to apply and on any reasonably careful reading of them the Plaintiff would have been on notice of the exclusive jurisdiction clause. 

However, I am satisfied that it is not correct to determine this matter by reference to the Irish law of contract. In the case of an exclusive jurisdiction clause, the provisions of Article 17 of the Brussels Convention must be strictly applied and in the course of that application the clause must be interpreted in accordance with European Community Law. I therefore turn to consider the provisions of Article 17. The relevant part of the article reads as follows:- 

If the parties, one or more of whom is domiciled in a Contracting State, have agreed that a court or the courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have exclusive jurisdiction. Such an agreement conferring jurisdiction shall be either in writing or evidenced in writing . . ." 

It has been held by the Court of Justice of the European Communities that there must be consistency of interpretation of the article throughout the community and that therefore the interpretation of an exclusive jurisdiction clause is not governed by national law. Since Article 17 constitutes a derogation from clear provisions in the Convention which are normally to apply in relation to jurisdiction, it is to be strictly construed. In particular, two essential requirements have to be complied with. One is that there is a genuine consensus between the parties as expressed in the contract that the Courts in question have exclusive jurisdiction and secondly, any such agreement must either be in writing or evidenced in writing. There is a third alternative which does not apply here. 

These requirements have been considered at some length in Case 24/76 Estasis Salotti v RUWA, judgment of the Court of Justice of the European Communities dated 14 December, 1976 and the Advocate General's opinion in that case delivered on 17 November, 1976 as well as in Case 25/76 Segoura v Bonakdarian, judgment of the same Court delivered 14 December, 1976 and the opinion of the Advocate General in that case delivered also on 17 November, 1976. The first of those cases concerned a documentary contract in which terms and conditions including the exclusive jurisdiction clause were printed on the back of the document but without any reference to them in the body of the contract. There was also an alternative issue as to whether a reference in the contract to a prior offer which contained the text of general conditions that did include an exclusive jurisdiction clause was sufficient to comply with Article 17. I do not intend to review the detailed arguments set out in the judgment and the Advocate General's opinion. It is sufficient to refer to the actual decision of the Court which read as follows:- 

"The court in answer to the questions referred to it by the Bundesgerichtshof by order of 18 February, 1976 hereby rules:- 

'Where a clause conferring jurisdiction is included among the general conditions of sale of one of the parties, printed on the back of a contract, the requirement of a writing under the first paragraph of Article 17 of the Convention of the 27 September, 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters is fulfilled only if the contract signed by both parties contains an express reference to those general conditions.' 

In the case of a contract concluded by reference to earlier offers which were themselves made with reference to the general conditions of one of the parties including a clause conferring jurisdiction, the requirement of a writing under the first paragraph of Article 17 of the Convention is satisfied only if the reference is express and can therefore be checked by a party exercising reasonable care." 

On the basis of that decision I am satisfied that the Plaintiff, in referring to the quotation and making the February order, must be taken to have been referring to all the terms and conditions of the quotation and therefore must be taken to have agreed to the exclusive jurisdiction clause. In this case there was an express reference in the quotation to the terms and conditions and the exercise of minimum reasonable care in reading them would have established that there was an exclusive jurisdiction clause. It is also clear that in relation to this part of the contract at least there were signatures on both sides and therefore the requirement that the jurisdiction agreement be in writing was complied with. 

The Segoura case throws some further light on how the principles are to be applied. With reference to the relevant provision in Article 17 of the Convention, the European Court in its judgment has this to say:- 

"The way in which that provision is to be applied must be interpreted in the light of the effect of the conferment of jurisdiction by consent, which is to exclude both the jurisdiction determined by the general principle laid down in Article 2 and the special jurisdictions provided for in Articles 5 and 6 of the Convention. In view of the consequences that such an option may have on the position of the parties to the action the requirements set out in Article 17 governing the validity of clauses conferring jurisdiction must be strictly construed. 

By making such validity subject to the existence of an 'agreement' between the parties, Article 17 imposes upon the Court before which the matter is brought the duty of examining, first, whether the clause conferring jurisdiction upon it was in fact the subject of a consensus between the parties, which must be clearly and precisely demonstrated. 

The purpose of the formal requirements imposed by Article 17 is to ensure that the consensus between the parties is in fact established." 

That case however related to an orally concluded contract and in answer to two questions put to the Court, the Court held as follows:- 

"In the case of an orally concluded contract, the requirements of the first paragraph of Article 17 of the Convention of 27 September, 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters as to form are satisfied only if the vendor's confirmation in writing accompanied by notification of the general conditions of sale has been accepted in writing by the purchaser. 

The fact that the purchaser does not raise any objections against a confirmation issued unilaterally by the other party does not amount to acceptance on his part of the clause conferring jurisdiction unless the oral agreement comes within the framework of a continuing trading relationship between the parties which is based on the general conditions of one of them and those conditions contain a clause conferring jurisdiction." 

Essentially therefore the Estasis Salotti case was dealing with a situation where printed terms and conditions were at the back of a main contractual document but there was no reference to those terms and conditions in the body of the document. The Segoura case on the other hand was dealing with a situation where an oral agreement was concluded and only after such conclusion of an agreement were written terms and conditions sent out to the purchaser by the vendor. The question arose whether the absence of protest by the purchaser constituted acceptance. 

This case does not fall into either of those categories. It seems clear to me that the final contract entered into between the parties in this case, whether it be a written contract or a contract partly in writing and partly oral, incorporated the terms and conditions annexed to the quotation expressly referred to by the Plaintiff when making its order. In these circumstances a Court must hold that there was consensus between the parties as to the jurisdiction clause and that that agreement was in writing. Accordingly, this Court must decline jurisdiction and the Court will make a declaration to that effect and strike out the action. 

DISPOSITION